News & Advice

Here are five ways you can maximize your tax benefits before the end of the year. 

TAKE ADVANTAGE OF TAX DEDUCTIONS AND CREDITS 

Tax deductions allow you to deduct a certain amount of money from your taxable income. Along with tax deductions, tax credits reduce your tax bill, so qualifying for a tax credit is super satisfying. Tax credits are available for many groups of people, such as parents, low to middle-income households, and people pursuing educational opportunities. 

Get familiar with the tax deductions and tax credits that can benefit you, such as: 

• Making a donation to a charity (make sure to get a receipt!) 

• Claiming the child tax credit, which is available for families with children under 17. Check out the income requirements to see if you qualify. 

• Claiming the child and dependent care credit, which covers a portion of daycare for a child under 13, a spouse or parent unable to care for themselves, or another dependent. 

• Claiming the American Opportunity Tax Credit, which lets you claim all of the first $2,000 you spent on tuition, books, equipment, and school fees 

• Claiming the adoption credit, which helps taxpayers cover a certain amount of qualified adoption costs per child.

• The student loan interest deduction. You write off up to $2,500 from your taxable income if you paid interest on student loans.

• The lifetime learning credit, let's you claim 20% of the first $10,000 you paid toward tuition and fees, for a maximum of $2,000. 

ITEMIZE YOUR DEDUCTIONS  

Itemized deductions may add up to more than the standard deduction. The more you deduct, the less you’ll pay in taxes, so spending the time to itemize can pay off. Itemized deductions can include real property taxes, personal property taxes, mortgage interest, gifts to charities, and more. 

MAKE PAYMENTS AND CONTRIBUTIONS TO REDUCE YOUR TAXABLE INCOME

By making payments and contributions before the end of the year, you can reduce your taxable income. If you make your January mortgage payment in 2023, you can get the added interest for your mortgage interest deduction, for example. You can also schedule medical appointments, like exams and treatments, during this time of year to help your medical expense deduction. 

CONTRIBUTE THE MAXIMUM TO YOUR TAX-ADVANTAGED RETIREMENT ACCOUNTS 

If you contribute to a 401k, IRA, or health savings account, it’s smart to fill up those accounts before the year ends. These accounts are tax-deferred, so you don’t have to pay tax on interest the account accrues until you withdraw money. The contributions you make can help you get a tax deduction. 

WORK WITH A TAX PROFESSIONAL 

One of the best ways to maximize your tax benefits is to work with a tax professional. They’ll be able to help you find the credits and deductions available to you and make sure all bases are covered, especially if you have situations that could make filing taxes more complicated, like owning a small business. They can also give you tips to prepare for the next year. 

INOVA FEDERAL CAN HELP 

At INOVA Federal, we’re here to help you make the most of your tax benefits. We offer HSAs, individual retirement accounts, and more that can help you save your money wisely. 

When you’re ready to open an account, stop in and see us at one of our convenient locations or visit us online.